News by Andrew Kameka on Friday February 28, 2014.
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In-app purchases represent a major revenue source for mobile game developers, and those developers can thank a very small number of people for funding their efforts. According to the Swrve Monetization Report, 0.15 percent of mobile gamers generated more than 50 percent of the revenue earned from in-app purchases. Only 1.5 percent of players pay anything at all, so the average revenue per user (ARPU) among paying customers must be very high for the most successful companies.
In recent years, in-app purchases have become a common practice as the most effective way of generating money. Rather than charge players $9.99 for a racing game, companies distribute the game for free but make it so difficult to advance that at a certain point, players will pay money for upgrades, repairs, and boosters for their car. In the long run, someone might spend $20 to $40 instead of $9.99. The same is true for adventure games, first person shooters, and even puzzles like Candy Crush. Some games spark such feverish devotion that one game company claims a player spends $10,000 per month on in-app purchases. That's either a dubious claim or an extreme example, but there are plenty of people out there consistently spending money on in-app purchases.
The monetization report paints a picture of popular free-to-play games being subsidized by a tiny portion of the gaming population. Recode likens it to the way that casinos target "whales" who spend big money and lead to higher profits than the bulk of their customers offer. If people are willingly spending that much money, maybe the European Commission ought to have some addiction specialists participate in its meetings about in-app purchase warnings.source: Recode, via: BGR
Andrew is MobileBurn.com's managing editor. He is based in Miami, Florida.